Section 80E allows us to claim Education Loan deduction based on the income tax act. Only the interest portion paid via Loan EMI can be claimed with 80E Deduction in Old Tax regime. There is no maximum limit to be claimed in this deduction in a financial year, but only up to 8 years of interest amount in Education Loan can be claimed if loan is taken for self, spouse or children.
Let us understand Section 80E Income Tax Deduction in detail.
- What is Section 80E?
- Eligibility to claim Section 80E Income Tax Deduction
- Section 80E Tax Deduction Limits
- Can Parents Claim 80E?
- Where can Education Loan be Taken?
- Frequently Asked Questions
What is Section 80E?
- Section 80E of Income Tax Act allows us to claim Interest amount of Education Loan that is taken for higher studies
- In order to promote higher studies by individuals of India, government provides tax benefits if you take Education Loan for higher studies.
- You can take Education loan for self, spouse or children, or any student for whom you are the legal guardian and claim tax benefits on such education loan
- Only Interest amount from EMI can be claimed as deduction under Section 80E. This Section does not allow principal amount to be claimed as deduction
- You can claim the deduction up to 8 years starting from the year when you started repaying the loan amount
- There is no maximum limit to be claimed in a financial year, so you can claim the entire interest amount of loan EMI paid by you in a financial year to save income tax.
- If your loan tenure is more than 8 years, then you can claim the interest amounts paid in Emi only for 8 years and not beyond 8 years of interest on your education loan.
- You can use the Home Loan EMI calculator to check Loan EMI. It works for Education Loan EMI calculation as well.
- This deduction can be claimed with Old Tax Regime. New Tax Regime does not allow this deduction.
ALSO READ: Old vs New Tax Regime Which is Better?
Eligibility to claim Section 80E Income Tax Deduction
There are certain conditions based on which Section 80E deduction can be claimed:
- You must be an Individual to claim Section 80E Deduction. HUF or Hindi Undivided Family are not eligible to claim 80E Deduction
- The education loan must be taken for the purpose of higher education only and not for any other purpose
- Education loan can be taken for self, spouse, children or any student for whom you are the guardian to take tax benefits of Section 80E of Income Tax Act
- You can claim the deduction only up to 8 years from starting of repaying the education loan EMI. Interest paid beyond 8 years cannot be claimed
- Education Loan must be taken from recognized financial institutions or Banks and charitable organizations and not from friends or relatives
Love Reading Books? Here are some of the Best Books you can Read: (WITH LINKS)
Section 80E Tax Deduction Limits
There is no maximum limit under Section 80E deduction to be claimed in a financial year. You can claim the entire interest amount paid of education loan paid in the financial year.
It is important to note that you can claim this deduction only up to 8 years from the start of repaying your education loan EMI.
Can Parents Claim 80E?
Yes parents can claim this deduction to save their income tax if education loan is taken for their children’s higher studies purpose.
You can take the education loan for self, spouse, children or any student whom you represent as legal guardian.
ALSO READ: Section 80C Deductions of Income Tax Act
Where can Education Loan be Taken?
Education Loan can be taken in banks or financial institutions. While claiming the deduction, you can generate the interest certificate for the financial year to be submitted while filing Income Tax Return (ITR).
So Section 80E of income tax Act helps us to save income tax while claiming interest paid on education loan taken for higher studies of self, spouse or children. This section does not have any maximum limit to be claimed in a financial year.
You can claim this deduction only for 8 years, starting from the year when you started repaying the loan with EMI. Parents can claim this deduction for education loan taken for children and loan must be taken from banks or financial institutions and not from family, friends or relatives.
Some more Reading:
- Section 80D Tax Deduction to claim Medical Insurance Premiums
- 5 Golden Rules of Finance
- Section 24 Deduction to claim Home Loan Interest amount
Frequently Asked Questions
What is Section 80E Education Loan Deduction?
section 80E deduction of income tax act helps us to claim interest amount of education loan taken for higher studies. The loan must be taken from bank or financial institution and not from family or friends. There is no maximum limit of deduction that can be claimed with 80E.
Who can claim 80E Deduction?
The tax payer can take education loan for higher studies for self, spouse or children to claim Section 80E Deduction in a financial year to save income tax.
Maximum period of Deduction with Section 80E?
You can claim deduction with Section 80E on education loan for 8 years. Interest paid after 8 years period will not be allowed to be claimed in this section.
Can we claim 80E with New tax regime?
No. you cannot claim 80E deduction with new tax regime. You can claim this only when you opt for old tax regime.
Is it good to repay Education Loan early?
Since you can claim interest amounts up to 8 years, it is better to plan your payments accordingly. Earlier you pay the loan amount, you’ll pay less interest amount, but at the same time, less income tax will be saved.
Also, it is important to note that it is not ideal to take loans just for saving income tax. The loan interest amount you pay is full amount, whereas the tax you will be paying will be maximum 33% on the interest amount that goes from your pocket, so plan accordingly while you can afford the loan EMI and also save loan interest amounts to some extent.
SHOW your Support!
Found this Helpful? DONATE any amount to see more useful Content. Scan below QR code using any UPI App!
UPI ID: abhilashgupta8149-1@okhdfcbank
Verify that you are “Paying Abhilash Gupta” before making the transaction so that it reaches me. It makes my Day 🙂
Thank you for Donating. Stay Tuned!
Income Tax Calculator App – FinCalC
For Income Tax Calculation on your mobile device, you can Download my Android App “FinCalC” which I have developed for you to make your income tax calculation easy.
What you can do with this mobile App?
- Calculate Income Tax for new FY 2023-24 and previous FY 2022-23
- Enter estimated Investments to check income tax with Old and New Tax Regime
- Save income tax details and track regularly
- Know how much to invest more to save income tax
- More calculators including PPF, SIP returns, Savings account interest and lot more
Use Popular Calculators:
- Income Tax Calculator
- Home Loan EMI Calculator
- SIP Calculator
- PPF Calculator
- HRA Calculator
- Step up SIP Calculator
- Savings Account Interest Calculator
- Lump sum Calculator
- FD Calculator
- RD Calculator
- Car Loan EMI Calculator
- Bike Loan EMI Calculator
- Sukanya Samriddhi Calculator
- Provident Fund Calculator
- Senior Citizen Savings Calculator
- NSC Calculator
- Monthly Income Scheme Calculator
- Mahila Samman Savings Calculator
- Systematic Withdrawal Calculator
- CAGR Calculator
I’d love to hear from you if you have any queries about Personal Finance and Money Management.
JOIN Telegram Group and stay updated with latest Personal Finance News and Topics.
Download our Free Android App – FinCalC to Calculate Income Tax and Interest on various small Saving Schemes in India including PPF, NSC, SIP and lot more.
Follow the Blog and Subscribe to YouTube Channel to stay updated about Personal Finance and Money Management topics.